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What is merchandise process fee and how is it calculated?

The merchandise processing fee is imposed by the US customs and border protection on imports entering the country. Learn more about it in this blog.

Merchandise processing fee (MPF) is a key part of the import process for goods entering the US. This fee is charged by the US customs and border protection (CBP) agency, and is calculated based on the value of merchandise being imported.

What is merchandise processing Fee (MPF)?

Merchandise processing fee (MPF) is a fee imposed by the US customs and border protection (CBP) on imports entering the US. This is based on the value of the imported merchandise, and its purpose is to cover the costs of processing and examining goods at the border. In most trade transactions, MPF is paid by the importer of record, which can be the importer, exporter, or a customs broker acting on behalf of either of them¹.

When is merchandise processing fee required?

There are two circumstances in which MPF is assessed:
· When goods are imported via ocean freight
· When goods are imported via air freight

The minimum permitted price of imported goods is based on their declared value or the value entered on import forms. Both taxable and duty-free imports are included in the MPF calculation.

Which countries are exempted from merchandise processing fees?

Products and goods imported from Mexico, Canada, Australia, Korea, and a few other South American countries are exempt from MPF fees. Importers bringing in goods from these countries usually do not need to pay MPF. However, it is important for exporters and importers to keep a check on regulations and updates.

How are MPF payments made?

The US Customs and Border Protection (CBP) will make all the decisions about the fee, including scheduling, processing fee amount, installments or cutbacks in the fee, newest payment dates, and other similar aspects. A fee is assessed and paid when an import customs entry is processed. Payments for MPF contributions are made in US Dollars to the US Customs and Border Protection. The release of cargo may be delayed if MPF is not paid on time.

Merchandise processing fee (MPF) vs harbor maintenance fee (HMF)

The CBP also charges a fee called the harbor maintenance fee (HMF) for ocean shipments, which is based on the value of the shipment. Importers are required to pay .125% of the value of the commercial cargo shipped if the loading and unloading occurs at a port³.

How does MPF impact international shipping costs?

The US is a top import destination for many exporters in India and other parts of the world. A change in MPF can impact global freight prices and shipping costs as a change in regional fuel prices does on international shipping rates.

Understanding fees and regulations like MPF helps exporters prepare necessary documents and sell their products internationally. With e-commerce exports programs like Amazon Global Selling and the international tools it provides for seamless logistics, exporting from India has become easier than before.

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Frequently Asked Questions

Who pays the merchandise processing fee and how is it paid?

The importer is usually responsible for paying MPF, and the amount will be determined when the customs declaration is processed. Release of cargo may be delayed if the fees are not paid.

Is MPF refundable?

While MPF can be waived during importation, under USMCA, MPF cannot be refunded after entry. In the duty drawback program, fees paid for MPF and HMF can be claimed.

Published on May 25, 2023.

Sources:
1. https://www.cbp.gov/trade/priority-issues/trade-agreements/merchandise-processing-fee
2. https://www.freightcourse.com/merchandise-processing-fee/
3. https://cbpcomplaints.cbp.gov/s/article/Article-283?language=en_US
4. https://www.flexport.com/glossary/merchandise-processing-fee/
5. https://www.dripcapital.com/en-us/resources/blog/merchandise-processing-fees

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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